HOUSTON and LONDON, April 26,
2024 /PRNewswire/ --
First Quarter 2024 Highlights
- Net Income: $473 million,
$501 million excluding identified
items(a)
- Diluted earnings per share: $1.44
per share; $1.53 per share excluding
identified items
- EBITDA: $1.0 billion,
$1.1 billion excluding identified
items
- Cash used by operating activities: $114
million
- Cash provided by operating activities of $4.3 billion over last 12 months resulting in 93%
cash conversion(b)
- Returned $408 million in
dividends to shareholders
Comparisons with the prior quarter and first quarter
2023 are available in the following table:
Table 1 - Earnings Summary
Millions of U.S.
dollars (except share data)
|
Three Months
Ended
|
March 31,
2024
|
December 31,
2023
|
March 31,
2023
|
Sales and other
operating revenues
|
$9,925
|
$9,929
|
$10,247
|
Net income
|
473
|
185
|
474
|
Diluted earnings per
share
|
1.44
|
0.56
|
1.44
|
Weighted average
diluted share count
|
326
|
326
|
327
|
EBITDA(a)
|
1,047
|
639
|
1,131
|
|
Excluding
Identified Items(a)
|
Net income excluding
identified items
|
$501
|
$411
|
$822
|
Diluted earnings per
share excluding identified items
|
1.53
|
1.26
|
2.50
|
Impairments,
pre-tax
|
—
|
241
|
252
|
Refinery exit costs,
pre-tax
|
36
|
50
|
124
|
EBITDA excluding
identified items
|
1,063
|
910
|
1,452
|
|
(a) See
"Information Related to Financial Measures" for a discussion of the
company's use of non-GAAP financial measures and Tables 2-7 for
reconciliations or calculations of these financial measures.
"Identified items" include adjustments for lower of cost or market
("LCM"), impairments and refinery exit costs.
|
(b) Cash
conversion is net cash provided by operating activities divided by
EBITDA excluding LCM and impairment.
|
LyondellBasell Industries (NYSE: LYB) today announced net income
for the first quarter 2024 of $473
million, or $1.44 per diluted
share. During the quarter, the company recognized identified
items of $28 million, net of
tax. These items, which impacted first quarter earnings by
$0.09 per share, were related to
costs incurred from plans to exit the refining business.
First quarter 2024 EBITDA was $1.0
billion, or $1.1 billion
excluding identified items.
In North America, lower costs
for natural gas-based feedstocks and energy benefited olefins and
polyolefins margins while regional demand for polyethylene
improved. The company's North American volumes were
constrained by downtime in olefins, polyolefins, propylene oxide,
oxyfuels and acetyls. In Europe, logistics disruptions in the
Red Sea restricted competitive imports and led to increased volumes
from LYB's local assets for olefins, polyethylene, polypropylene
and propylene oxide and derivatives. Globally, tepid demand
for durable goods continued to challenge volumes and margins for
polypropylene and propylene oxide.
The company remains committed to its balanced and disciplined
capital allocation strategy. In the first quarter, LYB used
$114 million of cash for operating
activities, invested $483 million in
capital expenditures for the businesses and returned $408 million to shareholders through
dividends. The use of cash by operating activities during the
quarter was due to a build in working capital driven by expected
seasonality as well as higher volumes and prices in several
businesses. During the first quarter, LYB successfully issued
$750 million of bonds to refinance
our 2024 maturity at a lower interest rate. At the end of the
quarter, the company held $2.3
billion in cash and short-term investments and $6.5 billion in available liquidity.
LYB is methodically building a profitable Circular & Low
Carbon Solutions (CLCS) business as one of the key pillars of our
three-pillar corporate strategy. Since 2019, sales volumes of
the company's recycled and renewable-based polymers have grown at a
compound annual growth rate of 55 percent. LYB produced and
marketed over 120 thousand tons of recycled and renewable-based
polymers in 2023(c).
"LyondellBasell remains focused on unlocking significant value
through our strategy while managing challenging market
conditions. Our team continues to grow our CLCS business,
with LYB building capabilities across the value chain, from
upstream plastic waste sourcing to providing recycled and
renewable-based polymers that meet the increasing demand from our
customers," said Peter Vanacker,
LyondellBasell Chief Executive Officer.
OUTLOOK
In the second quarter, the company expects seasonal demand
improvements across most businesses. Low costs for natural
gas and NGLs should continue to benefit margins from LYB's North
American and Middle East
production relative to higher oil-based costs in most other
regions. With the start of the summer driving season,
oxyfuels and refining margins are expected to increase with higher
gasoline crack spreads and lower butane costs. During the
second quarter, LYB expects to operate its assets in line with
market demand with average operating rates of 85% for global
olefins and polyolefins assets and 80% for the Intermediates &
Derivatives assets. The company continues to monitor targeted
stimulus efforts and remains watchful for demand improvements in
China.
"One year after launching our new strategy, the LYB team
continues to be highly focused on execution, accountability and
delivering results. Sales volumes for recycled and
renewable-based polymers are rapidly growing through our
comprehensive approach to building a leading CLCS business. We will
extend this growth with continued development of our integrated
hubs in Cologne and Houston," said Vanacker.
(c) Recycled and
renewable-based polymer production and marketing includes (i) joint
venture production marketed by LYB plus our pro rata share of the
remaining production produced and marketed by the joint venture,
and (ii) production via third-party tolling
arrangements.
|
CONFERENCE CALL
LyondellBasell will host a conference call April 26 at
11 a.m. ET. Participants on the
call will include Chief Executive Officer Peter Vanacker, Executive Vice President and
Chief Financial Officer Michael
McMurray, Executive Vice President of Global Olefins and
Polyolefins and Refining Kim Foley, Executive Vice President of
Intermediates and Derivatives Aaron
Ledet, Executive Vice President of Advanced Polymer
Solutions Torkel Rhenman and Head of
Investor Relations David Kinney. For event access, the
toll-free dial-in number is 1-877-407-8029, international dial-in
number is 201-689-8029 or click the CallMe link. The slides
and webcast that accompany the call will be available
at www.LyondellBasell.com/earnings. A replay of the call
will be available from 1:00 p.m. ET
April 26 until May 26,
2024. The replay toll-free dial-in numbers are 1-877-660-6853
and 201-612-7415. The access ID for each is 13743073.
ABOUT LYONDELLBASELL
We are LyondellBasell (NYSE: LYB) – a leader in the global
chemical industry creating solutions for everyday sustainable
living. Through advanced technology and focused investments,
we are enabling a circular and low carbon economy. Across all
we do, we aim to unlock value for our customers, investors and
society. As one of the world's largest producers of polymers
and a leader in polyolefin technologies, we develop, manufacture
and market high-quality and innovative products for applications
ranging from sustainable transportation and food safety to clean
water and quality healthcare. For more information, please
visit www.LyondellBasell.com or follow @LyondellBasell on
LinkedIn.
FORWARD-LOOKING STATEMENTS
The statements in this release relating to matters that are not
historical facts are forward-looking statements. These
forward-looking statements are based upon assumptions of management
of LyondellBasell which are believed to be reasonable at the time
made and are subject to significant risks and uncertainties.
When used in this release, the words "estimate," "believe,"
"continue," "could," "intend," "may," "plan," "potential,"
"predict," "should," "will," "expect," and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. Actual
results could differ materially based on factors including, but not
limited to, market conditions, the business cyclicality of the
chemical, polymers and refining industries; the availability, cost
and price volatility of raw materials and utilities, particularly
the cost of oil, natural gas, and associated natural gas liquids;
our ability to successfully implement initiatives identified
pursuant to our Value Enhancement Program and generate anticipated
earnings; competitive product and pricing pressures; labor
conditions; our ability to attract and retain key personnel;
operating interruptions (including leaks, explosions, fires,
weather-related incidents, mechanical failure, unscheduled
downtime, supplier disruptions, labor shortages, strikes, work
stoppages or other labor difficulties, transportation
interruptions, spills and releases and other environmental risks);
the supply/demand balances for our and our joint ventures'
products, and the related effects of industry production capacities
and operating rates; our ability to manage costs; future financial
and operating results; benefits and synergies of any proposed
transactions; receipt of required regulatory approvals and the
satisfaction of closing conditions for our proposed transactions;
final investment decision and the construction and operation of any
proposed facilities described; our ability to align our assets and
expand our core; legal and environmental proceedings; tax rulings,
consequences or proceedings; technological developments, and our
ability to develop new products and process technologies; our
ability to meet our sustainability goals, including the ability to
operate safely, increase production of recycled and renewable-based
polymers to meet our targets and forecasts, and reduce our
emissions and achieve net zero emissions by the time set in our
goals; our ability to procure energy from renewable sources; our
ability to build a profitable Circular & Low Carbon Solutions
business; the continued operation of and successful shut down and
closure of the Houston Refinery, including within the expected
timeframe; potential governmental regulatory actions; political
unrest and terrorist acts; risks and uncertainties posed by
international operations, including foreign currency fluctuations;
and our ability to comply with debt covenants and to repay our
debt. Additional factors that could cause results to differ
materially from those described in the forward-looking statements
can be found in the "Risk Factors" section of our Form 10-K for the
year ended December 31, 2023, which
can be found at www.LyondellBasell.com on the Investor Relations
page and on the Securities and Exchange Commission's website at
www.sec.gov. There is no assurance that any of the actions,
events or results of the forward-looking statements will occur, or
if any of them do, what impact they will have on our results of
operations or financial condition. Forward-looking statements
speak only as of the date they were made and are based on the
estimates and opinions of management of LyondellBasell at the time
the statements are made. LyondellBasell does not assume any
obligation to update forward-looking statements should
circumstances or management's estimates or opinions change, except
as required by law.
This release contains time sensitive information that is
accurate only as of the date hereof. Information contained in this
release is unaudited and is subject to change.
We undertake no obligation to update the information presented
herein except as required by law.
INFORMATION RELATED TO FINANCIAL MEASURES
This release makes reference to certain non-GAAP financial
measures as defined in Regulation G of the U.S. Securities Exchange
Act of 1934, as amended.
We report our financial results in accordance with U.S.
generally accepted accounting principles, but believe that certain
non-GAAP financial measures, such as EBITDA, and EBITDA, net income
and diluted EPS exclusive of identified items provide useful
supplemental information to investors regarding the underlying
business trends and performance of the company's ongoing operations
and are useful for period-over-period comparisons of such
operations. Non-GAAP financial measures should be considered
as a supplement to, and not as a substitute for, or superior to,
the financial measures prepared in accordance with GAAP.
We calculate EBITDA as income from continuing operations plus
interest expense (net), provision for (benefit from) income taxes,
and depreciation and amortization. EBITDA should not be
considered an alternative to profit or operating profit for any
period as an indicator of our performance, or as an alternative to
operating cash flows as a measure of our liquidity. We also
present EBITDA, net income and diluted EPS exclusive of identified
items. Identified items include adjustments for "lower of
cost or market" ("LCM"), impairments and refinery exit costs.
Our inventories are stated at the lower of cost or market.
Cost is determined using the last-in, first-out ("LIFO") inventory
valuation methodology, which means that the most recently incurred
costs are charged to cost of sales and inventories are valued at
the earliest acquisition costs. Fluctuation in the prices of
crude oil, natural gas and correlated products from period to
period may result in the recognition of charges to adjust the value
of inventory to the lower of cost or market in periods of falling
prices and the reversal of those charges in subsequent interim
periods, within the same fiscal year as the charge, as market
prices recover. Property, plant and equipment are recorded at
historical costs. If it is determined that an asset or asset
group's undiscounted future cash flows will not be sufficient to
recover the carrying amount, an impairment charge is recognized to
write the asset down to its estimated fair value. Goodwill is
tested for impairment annually in the fourth quarter or whenever
events or changes in circumstances indicate that the fair value of
a reporting unit with goodwill is below its carrying amount.
If it is determined that the carrying value of the reporting
unit including goodwill exceeds its fair value, an impairment
charge is recognized. We assess our equity investments for
impairment whenever events or changes in circumstances indicate
that the carrying amount of the investment may not be recoverable.
If the decline in value is considered to be other than temporary
the investment is written down to its estimated fair value.
In April 2022 we announced our
decision to cease operation of our Houston Refinery. In
connection with exiting the refinery business, we began to incur
costs primarily consisting of accelerated lease amortization costs,
personnel related costs, accretion of asset retirement obligations
and depreciation of asset retirement costs.
Cash conversion is a measure commonly used by investors to
evaluate liquidity. Cash conversion means net cash provided
by operating activities divided by EBITDA excluding LCM and
impairment. We believe cash conversion is an important
financial metric as it helps management and other parties determine
how efficiently the company is converting earnings into
cash.
These non-GAAP financial measures as presented herein, may not
be comparable to similarly titled measures reported by other
companies due to differences in the way the measures are
calculated. In addition, we include calculations for certain
other financial measures to facilitate understanding. This
release contains time sensitive information that is accurate only
as of the time hereof. Information contained in this release
is unaudited and subject to change.
LyondellBasell undertakes no obligation to update the
information presented herein except to the extent required by
law.
Additional operating and financial information may be found on
our website at www.LyondellBasell.com/investorrelations.
These measures as presented herein, may not be comparable to
similarly titled measures reported by other companies due to
differences in the way the measures are calculated.
Table 2 -
Reconciliations of Net Income to Net Income Excluding Identified
Items and to EBITDA Including and Excluding Identified
Items
|
|
Three Months
Ended
|
Millions of U.S.
dollars
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Net income
|
$
473
|
|
$
185
|
|
$
474
|
add: Identified
items
|
|
|
|
|
|
Impairments,
pre-tax(a)
|
—
|
|
241
|
|
252
|
Refinery exit costs,
pre-tax(b)
|
36
|
|
50
|
|
124
|
Benefit from income
taxes related to identified items
|
(8)
|
|
(65)
|
|
(28)
|
Net income excluding
identified items
|
$
501
|
|
$
411
|
|
$
822
|
|
|
|
|
|
|
Net income
|
$
473
|
|
$
185
|
|
$
474
|
Loss from discontinued
operations, net of tax
|
1
|
|
1
|
|
1
|
Income from continuing
operations
|
474
|
|
186
|
|
475
|
Provision for (benefit
from) income taxes
|
122
|
|
(7)
|
|
167
|
Depreciation and
amortization(c)
|
365
|
|
380
|
|
396
|
Interest expense,
net
|
86
|
|
80
|
|
93
|
add: Identified
items
|
|
|
|
|
|
Impairments(a)
|
—
|
|
241
|
|
252
|
Refinery exit
costs(d)
|
16
|
|
30
|
|
69
|
EBITDA excluding
identified items
|
1,063
|
|
910
|
|
1,452
|
less: Identified
items
|
|
|
|
|
|
Impairments(a)
|
—
|
|
(241)
|
|
(252)
|
Refinery exit
costs(d)
|
(16)
|
|
(30)
|
|
(69)
|
EBITDA
|
$
1,047
|
|
$
639
|
|
$
1,131
|
|
|
|
|
|
|
|
(a) The three
months ended December 31, 2023 reflects non-cash impairment charges
of $241 million, which includes $192 million related to Dutch PO/SM
joint venture assets in our Intermediates & Derivatives
segment. The three months ended March 31, 2023 reflects a non-cash
goodwill impairment charge of $252 million in our Advanced Polymer
Solutions segment.
|
(b) Refinery exit
costs include accelerated lease amortization costs, personnel
related costs, accretion of asset retirement obligations and
depreciation of asset retirement costs. See Table 7 for additional
detail on refinery exit costs.
|
(c) Depreciation
and amortization includes depreciation of asset retirement costs in
connection with exiting the Refining business. See Table 7 for
additional detail on refinery exit costs.
|
(d) Refinery exit
costs include accelerated lease amortization costs, personnel
related costs and accretion of asset retirement obligations. See
Table 7 for additional detail on refinery exit costs.
|
Table 3 -
Reconciliation of Diluted EPS to Diluted EPS Excluding Identified
Items
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Diluted earnings per
share
|
$
1.44
|
|
$
0.56
|
|
$
1.44
|
Add: Identified
items
|
|
|
|
|
|
Impairments
|
—
|
|
0.59
|
|
0.77
|
Refinery exit
costs
|
0.09
|
|
0.11
|
|
0.29
|
Diluted earnings per
share excluding identified items
|
$
1.53
|
|
$
1.26
|
|
$
2.50
|
|
|
|
|
|
|
Table 4 -
Reconciliation of Net Cash Provided by (Used in) Operating
Activities to EBITDA Including and
Excluding LCM and Impairment
|
|
Year
Ended
|
|
Three Months
Ended
|
|
Last Twelve
Months
|
Millions of U.S.
dollars
|
December 31,
2023
|
|
March 31,
2023
|
|
March 31,
2024
|
|
March 31,
2024
|
Net cash provided by
(used in) operating activities
|
$
4,942
|
|
$
482
|
|
$
(114)
|
|
$
4,346
|
Adjustments:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
(1,534)
|
|
(396)
|
|
(365)
|
|
(1,503)
|
Impairments(a)
|
(518)
|
|
(252)
|
|
—
|
|
(266)
|
Amortization of
debt-related costs
|
(9)
|
|
(3)
|
|
(2)
|
|
(8)
|
Share-based
compensation
|
(91)
|
|
(24)
|
|
(34)
|
|
(101)
|
Equity loss, net of
distributions of earnings
|
(189)
|
|
(5)
|
|
(28)
|
|
(212)
|
Deferred income tax
(provision) benefit
|
(43)
|
|
(6)
|
|
9
|
|
(28)
|
Changes in assets and
liabilities that (provided) used cash:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(110)
|
|
279
|
|
717
|
|
328
|
Inventories
|
(18)
|
|
319
|
|
108
|
|
(229)
|
Accounts
payable
|
(141)
|
|
(40)
|
|
(196)
|
|
(297)
|
Other, net
|
(168)
|
|
120
|
|
378
|
|
90
|
Net income
|
2,121
|
|
474
|
|
473
|
|
2,120
|
Loss from discontinued
operations, net of tax
|
5
|
|
1
|
|
1
|
|
5
|
Income from continuing
operations
|
2,126
|
|
475
|
|
474
|
|
2,125
|
Provision for income
taxes
|
501
|
|
167
|
|
122
|
|
456
|
Depreciation and
amortization
|
1,534
|
|
396
|
|
365
|
|
1,503
|
Interest expense,
net
|
348
|
|
93
|
|
86
|
|
341
|
add: LCM
charges
|
—
|
|
—
|
|
—
|
|
—
|
add:
Impairments(a)
|
518
|
|
252
|
|
—
|
|
266
|
EBITDA excluding LCM
and impairments
|
5,027
|
|
1,383
|
|
1,047
|
|
4,691
|
less: LCM
charges
|
—
|
|
—
|
|
—
|
|
—
|
less:
Impairments(a)
|
(518)
|
|
(252)
|
|
—
|
|
(266)
|
EBITDA
|
$
4,509
|
|
$
1,131
|
|
$
1,047
|
|
$
4,425
|
|
|
|
|
|
|
|
|
|
(a) The year
ended December 31, 2023 reflects non-cash impairment charges of
$518 million, which includes a non-cash goodwill impairment charge
of $252 million in our Advanced Polymer Solutions segment,
recognized in the first quarter of 2023, and $192 million related
to Dutch PO/SM joint venture assets in our Intermediates &
Derivatives segment, recognized in the fourth quarter of
2023.
|
Note: Last twelve
months March 31, 2024 is calculated as year ended December 31,
2023, plus three months ended March 31, 2024, minus three months
ended March 31, 2023.
|
Table 5 -
Calculation of Cash Conversion
|
|
Year
Ended
|
|
Three Months
Ended
|
|
Last Twelve
Months
|
Millions of U.S.
dollars
|
December 31,
2023
|
|
March 31,
2023
|
|
March 31,
2024
|
|
March 31,
2024
|
Net cash provided by
(used in) operating activities
|
$
4,942
|
|
$
482
|
|
$
(114)
|
|
$
4,346
|
divided by:
|
|
|
|
|
|
|
|
EBITDA excluding LCM
and impairment(a)
|
5,027
|
|
1,383
|
|
1,047
|
|
4,691
|
Cash
conversion
|
98 %
|
|
35 %
|
|
(11) %
|
|
93 %
|
|
|
|
|
|
|
|
|
|
(a) See Table 4
for a reconciliation of net cash provided by (used in) operating
activities to EBITDA including and excluding LCM and
impairments.
|
Note: Last twelve
months March 31, 2024 is calculated as year ended December 31,
2023, plus three months ended March 31, 2024, minus three months
ended March 31, 2023.
|
Table 6 -
Calculation of Cash and Liquid Investments and Total
Liquidity
|
Millions of U.S.
dollars
|
March 31,
2024
|
Cash and cash
equivalents and restricted cash
|
$
2,331
|
Short-term
investments
|
—
|
Cash and liquid
investments
|
$
2,331
|
add:
|
|
Availability under
Senior Revolving Credit Facility
|
3,250
|
Availability under U.S.
Receivables Facility
|
900
|
Total
liquidity
|
$
6,481
|
|
|
Table 7 - Refinery
Exit Costs
|
|
Three Months
Ended
|
Millions of U.S.
dollars
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Refinery exit
costs:
|
|
|
|
|
|
Accelerated lease
amortization costs
|
$
8
|
|
$
10
|
|
$
51
|
Personnel
costs
|
6
|
|
17
|
|
16
|
Asset retirement
obligation accretion
|
2
|
|
3
|
|
2
|
Asset retirement cost
depreciation
|
20
|
|
20
|
|
55
|
Total refinery exits
costs
|
$
36
|
|
$
50
|
|
$
124
|
|
|
|
|
|
|
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SOURCE LyondellBasell